MADRID (Reuters) - Telefonica’s (TEF.MC) Colombian division plans to raise about 1.8 billion euros ($2.15 billion) in fresh capital to reduce debt and pay a fine linked to a local dispute, the Spanish telecoms company said on Wednesday.

Spanish parent Telefonica will subscribe to 1.2 billion euros of the capital raising by Colombia Telecomunicaciones, which is 67.5 percent-owned by Telefonica and 32.5 percent by the Colombian government.

Telefonica added that the operation would have no material financial impact on the group, beyond increasing its consolidated net debt by 40 million euros. Telefonica’s debt stood at 48.5 billion euros at the end of the second quarter.

“This operation strengthens the financial position of Telefonica Colombia, which, coupled with the investments made in recent years, allows the company to undertake a new phase,” the company said in a statement.

A further 472 million euros is earmarked for payment of a fine derived from a dispute with Colombia.

A Colombian arbitration court ruled in July that two companies, including Telefonica’s Movistar division, failed to return installed networks and infrastructure as part of agreements to provide cellular phone service more than a decade ago. It fined the firms as a result.

Telefonica has previously said it would fight the ruling and take the dispute to an international arbitration tribunal.

The company said on Wednesday it was contributing to paying the fine to show its commitment to its Colombian unit and its clients there, but added it still disagreed with the ruling and may still take legal action.

Analysts at Sabadell said in a note that the capital raising and ensuing settlements were positive.

“They significantly reduce some of the uncertainties weighing on the continuity of this asset,” the analysts said.

Telefonica shares were slightly up at 0.3 percent in early trading.

Reporting by Sarah White and Rodrigo de Miguel; Editing by David Goodman